Different aspects & technicality of Trading By CS Siddhartha Purohit


INTRADAY (Day Traders)

INTRADAY TRADE

Buying and Selling a stock on a particular trading day without taking the actual physical delivery of the shares. The objective of such trade is to make money on the basis of some price belief.
Some of the points which an intraday trader should always be kept in mind before entering into a day transactions

  • Call Put Ratio( Adverse or Favourable)
  • Order Book (No of Buyers and No of Sellers)
  • The trader should look into the order book and option statistics.
  • The day traders should be aware of any significant announcements which can have an immediate impact on the price of the stock, i.e Quarterly results, bonus, dividend, merger, etc.
  • The Scripts selected for day trading must have sufficient volume. i.e adequate buyers and sellers are available in the market.
  • One Should also look whether

Future Price > Spot Cash Price ( Go Long)
Future Price < Spot Cash Price ( Go Short)

However, the decision regarding going long and short on a particular script must be subject to market risk and conditions prevailing at that time.
  • The Most significant point which a trader should watch on an active note is the rate of change of Open Interest
Increase Of Open Interest with Increase in Price (Indicate Long Position Buildup).
Increase Of Open Interest with Decrease in Price (Indicate Short Position Buildup).

  • Swing Trades: Swing trades refers to the sudden change in price behaviour of a particular stock for a given change in the index.
  • It is technically advisable never to Short a particular stock near 52week low price because there might be a chance of short covering at the same time it is also not advisable to go long on a particular stock near 52 weeks high because of profit booking.
  • A trader should always check the gap between the bid rate/ ask rate it is always advisable to place a limit order rather than the market order in case there is a big gap between the bid rate and ask rate.
Note: The reader may have a difference of opinion, therefore all the suggestions for the improvements will be highly acceptable. The above views are subject to market conditions, the traders may have the different view with respect to any point. 

Author
CS Siddhartha Purohit


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